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The Democratic-controlled U.S. Senate, in conjunction with White House input, has passed a budget proposal that would avert the automatic tax increases and spending cuts that went into effect at 12:01 AM today. Or perhaps I should correct that—it averts the spending cuts, with the package almost exclusively focused on tax increases.

Even though I’ve advocated House Republicans being open to compromise, I’ve never suggested they be pushovers and a package this one-sided is much worse than the so-called fiscal cliff, and the House should dismiss the Senate plan for what it is—a politically-driven proposal aimed more at gaining partisan advantage than entering good-faith negotiations with the democratically elected GOP House majority (I include “democratically elected” because liberals seem to have decided that the only way the people spoke on November 6 was to re-elect President Obama and that the Republican House apparently dropped from the sky).

The budget passed by the Senate and Harry Reid is a politically-driven joke.

What possible reason is there for the House to accept this proposal? The badly needed spending cuts go into effect automatically without any action by the government. The only real difference in the tax increases is that the hike in marginal rates will apply at the $400,000 level rather than the $250,000 level. Nothing against those folks making a quarter-mil a year, but I’m not ready to give up the spending cuts to save them a few percentage points on the highest levels of their income.

This is a proposal done purely for show, so the White House and Senate can say they did something, and when their one-sided plan fails, to accuse the House of standing in the way. The political gamesmanship shows why rank-and-file House Republicans were wrong to undercut their speaker when he wanted a vote on a legitimate compromise deal. Thus, they now stand open to the label “the party of no.” The label is an intellectually vacuous term that means nothing more than “one who disagrees with the president”, but its capacity to stick is increased if the House doesn’t respond.

Ideally, it would have been nice if House Republicans and President Obama would have gotten together, acted like adults and negotiated a reasonable compromise. That hasn’t happened because neither side was interested. Obama wanted to act like he won an election for dictator rather than president. The House majority wanted to hunker down in a bunker and fight a resistance war for the next four years rather than address the national debt.

Thus, even though the House should reject this plan, they bear a fair share of the responsibility for creating the situation that led to this. Now they have to try and get to a reasonable compromise the hard way. And that way is this—since the Senate has passed a plan that’s essentially a Democratic dream, the House should counter and pass a plan that’s a Republican dream.

The process then requires both plans to go into a conference committee where negotiators from each body work out the differences between the two plans, with the compromise submitted to both the House and Senate for a vote. Which is where we should have been in the first place. It’s the long way around the mountain, but apparently no one in Washington does anything the easy way.

That’s enough talk about the so-called fiscal cliff for one day. Now I’m off to watch the Rose Bowl, and as a Wisconsin fan, I fully anticipate jumping off a cliff of a different kind by halftime. Happy New Year, everyone.

Dan Flaherty is the author of Fulcrum, an Irish Catholic novel set in postwar Boston with a traditional Democratic mayoral campaign at its heart, and he is the editor-in-chief of TheSportsNotebook.com

Dan,
Too late, the Republicans caved in and frankly I don’t see the electorate in this country getting upset at the man in the White House when the U.S. goes bankrupt at so much spending, period. You like me and most reasonable people would simply not spend more money than comes into our households, but the mentality in Washington is different and this President won’t get it till the country is in a complete fiscal mess. By then the electorate may decide it’s time to save the country with a different worldview and elect someone with that worldview, or they may decide to elect another leftist democrat to finish us off. If this nation was willing to re-elect a man with 23 million people unemployeed and a disaster of a foreign policy reflected on Benghazi, why would they not want to elect a democrat in 2016?
The same with the Church. We have the power to stop gay marriage, abortion on demand, in vitro fertilization, euthanasia, but many people would like to continue to take us in the direction of the culture of death, including “Catholics,” and perhaps the world needs to see how wrong it is, how we can’t continue to embrace darkness and reject Light, before the Church is once again heard loud and clear by the secular world. After all, Catholicism represents more than 1 billion Catholics worldwide, yet, weeks ago we had “Catholics” defending abortion and insulting the Holy Father in this very site. Dan, can you imagine what would happen if all or most Catholics worldwide were united?
Do I sound pessimistic? I am!

” The only real difference in the tax increases is that the hike in
marginal rates will apply at the $400,000 level rather than the $250,000
level”

Huh? Absent a deal, everyone’s taxes increase. Mr. Flaherty is confusing the change that President Obama agreed to; from $250K to $400K. The issue goes well beyond cuts to tax rates. The Bush tax cuts convert a considerable amount of ordinary income into capital gains. Those conversions largely depended on the efficacy of your lobbyist. For example, the earnings of commodities speculators are taxed as capital gains regardless of the holding period which is often measured in seconds.

This nonsense started with the preposterous supply-side mythology. Reagan tinkered without considering the fact that the tax code engenders behaviors. Until then, if you held something for one year or more and sold it at a profit, THAT was a capital gain – taxed at half the statutory rate. Our tax code lacks economic logic and is largely responsible for the ditch we are in. It’s one of the reasons that we don’t make stuff anymore. It’s also why our equity markets no longer serve the needs of growth-capital.

Mr. Obama campaigned in 2008 and, again, in 2012 on eliminating the Bush tax cuts except for those earning less than $250,000/year. It’s time. By the way, Mr. Flaherty, Democratic House candidates, in the aggregate garnered far more votes than their opponents. The only reason that Republicans are in the majority is through creative gerrymandering.

By the way, we were best served (with enormous prosperity) when there was a considerable gap between personal and corporate rates. For decades, this discouraged excessive executive compensation.

By the way, I am no pinko. My father was chairman and CEO of a publicly held insurance company and I am a retired CEO. My late brother was a CEO; My sister an attorney and former Sr. VP of a large bank. My entire family are capitalists. I am also a former Republican – when the GOP was still sane. Now it is run amok with know-nothings like Allen West and Michel Bachmann.

How did the Bush tax cuts “convert” ordinary income into capital gains? A cut in ordinary income rates is a cut in ordinary income rates.

On what basis do you claim that Reagan did not consider that the tax code affects behavior? And on what basis do you claim that his economic policy was not successful at improving economic conditions after the Carter years?

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